Cheat Sheets

The future value of an annuity means that you compute the sum of all payments plus the accumulated compound interest on the payments. The amount of an annuity and the interval between receiving and paying[more…]

The present value of an annuity shows you the single sum you need to invest at compound interest now in order to provide a series of payments back to you in the future. Sound like the type of information[more…]

Deferred annuities are a type of annuity contract that delays payments to the investor until the investor elects to receive them. When the investor is in savings mode, he makes payments into some sort[more…]

The definition of cash goes beyond paper bills and coinage. Any sort of account that’s backed by cash is deemed a cash account. For example, when you go to the college bookstore and write a check to pay[more…]

In the accounting world of cash, cash equivalents are close but no cigar! Now, the basic premise of cash equivalents is that they’re just a hair away from being available for withdrawal on demand. They’re[more…]

The big deal about controlling cash for your intermediate accounting class is making sure the balance sheet presentation doesn’t mislead users with the amount of cash available to meet day-to-day expenses[more…]

Accounts receivable (A/R) is the amount of money a customer owes the business for merchandise it purchases from a company or services a company renders. Just about all types of businesses can and probably[more…]

It’s not unusual for the list price of the goods available for sale or the total amount of the invoice to not be what the customer eventually ends up paying. The amount the customer pays may be subject[more…]

It’s a sad fact of life that businesses extending credit to their customers will probably have at least one or more deadbeat customer who just won’t pay the bills. Under generally accepted accounting principles[more…]

For the current asset section of the balance sheet, a note receivable is a short-term (coming due within 12 months of the balance sheet date) debt someone owes you. In many cases, this current asset arises[more…]

Three types of businesses operate: service, manufacturing, and merchandising. Breathe a sigh of relief, because you have to worry about only two (manufacturing and merchandising) here. Service businesses[more…]

With the last in, first out (LIFO) method, the company assumes that its newest items (the ones most recently purchased) are the first ones sold. LIFO is not codified in GAAP but is a tax concept that Internal[more…]

Figuring COGS and valuing ending inventory using all the cost flow assumptions is pretty easy when you get the hang of it. Plus, larger companies have software tailored to the task, which makes the undertaking[more…]

Accounting for merchandise inventory has its frustrating moments, but it’s easier than accounting for manufacturing inventory. A merchandising company such as a retail store has only one class of inventory[more…]

You may get quite a thrill when you’re out shopping and you see something fantastic on the discount rack. When you see it, you probably think, Ching-ching, I just scored! However, have you ever thought[more…]

Two major types of inventory systems exist: perpetual and periodic.Larger retailers have electronic cash registers (ECRs). If you’ve ever used the self-checkout, you’ve used one. The checkout features[more…]

Contingencies exist when a company has an existing circumstance as of the date of the financial statements that may cause a gain or loss in the future, depending on events that haven’t yet happened and[more…]

Finally, that wonderful day comes when the debt is paid off. You may not think of it as a thorny accounting situation — and it isn’t, as long as the debt is held to maturity. In other words, there’s no[more…]

Dividends are distributions of company earnings to the shareholders. They can be in the form of cash, stock, or property. Most unrelated investors (not directly involved with the day-to-day operations[more…]

In addition to using different standards for financial income (also known as book income) versus taxable income, the entities and individuals interested in financial accounting and taxable income are different[more…]

Temporary differences occur because financial accounting and tax accounting rules are somewhat inconsistent when determining when to record some items of revenue and expense. Because of these inconsistencies[more…]

It’s a fact of life in the business fast lane that companies don’t always have more revenue than expenses every year. It’s not necessarily a bad thing, and it can happen for many reasons, including moving[more…]

What’s a cost and what’s an expense? Consider an example. Assume that Penway Manufacturing, Inc., makes toasters and needs to buy some new metal fabrication machines to form the outer shell of the toaster[more…]